by Andres Oppenheimer

When I asked a group of 10 influential business people at a luncheon here last week whether President Cristina Fernandez de Kirchner is likely to intensify or moderate her leftist-populist policies after her expected victory in the Oct. 23 elections, a majority of six raised their hands indicting that they fear she will become more radical.

In the discussion that followed, they cited three major reasons:

1. The president is almost sure to feel emboldened by her unexpectedly high vote in the Aug. 14 primary election. She got more than 50 percent of the vote, 38 percentage points more than her nearest rival.

2. She will be increasingly tempted to nationalize businesses or seize private sector assets because the government is broke. Despite benefitting from the biggest economic bonanza in recent memory, thanks to booming world prices of Argentina's soybean exports, the government has spent well beyond its means in recent years.

Fernandez de Kirchner, and her late husband former president Nestor Kirchner before her, have created social programs that give away cash to millions of people without requiring them to work, and have heavily subsidized electricity, gas and other public services.

Bus fares in this capital, for instance, have been frozen for several years at 30 cents a ride, in a country where most consumer goods are more expensive than in the United States. Argentines are on a consumption spree, buying everything from cars and plasma TVs to apartments in Miami.

But the "fiesta" will soon be over, the six pessimistic business leaders said. If Fernandez de Kirchner is forced to choose between cutting subsidies and nationalizing businesses, she will opt for the latter, they said.

3. Despite the president's election campaign moderation in recent months, her vice minister of economy, Roberto Feletti, said recently that the government will "deepen the economic model," a euphemism for increasing the state control over the economy, they said.

Hours later, I presented the results of my decidedly unscientific focus group to Alberto Fernández, the president's former chief of staff, who despite a recent run-in with the government, told me that he voted for Fernandez de Kirchner in the Aug. 14 primary.

"The possibility of a government radicalization is increasingly smaller," Fernandez told me. "The Peronista (government) party will be thinking of how to win the 2015 elections, and radical measures would generate conflicts that would not help it achieve that goal."

But the former chief of staff cautioned that the government has a "suicidal gene" that sometimes leads it to take impulsive actions when it feels very strong, such as when it cracked down on ranchers three years ago. He added, "There is always a risk that this suicidal gene will show up unexpectedly."

Another Peronist party insider, who is very close to the president, said that Fernandez de Kirchner is likely to tone down her radical leftist leanings in her second term. True, the government won't be able to maintain its current subsidies for the entire population, but will solve that problem by raising bus fares and electricity bills, while at the same time compensating the poor with higher cash handouts, he said.

He also dismissed the vice minister of economy's statement about "deepening the model" as meaningless, adding that Feletti is a low-level official who will soon leave his job to serve as congressman.

My opinion: I tend to disagree with the majority of business people who said in my informal luncheon poll that Fernandez de Kirchner is likely to move even closer to Venezuela, Bolivia or Ecuador's style of crazy populism. It's hard to be populist when you run out of money, and when there is no financial savior in sight.

The international context has changed, and Fernandez de Kirchner cannot count on Venezuelan President Hugo Chavez to rescue Argentina, as he did a few years ago. Venezuela is having its own financial problems, and Chavez is focused on winning the 2012 elections at home.

To maintain Argentina's consumption spree, avoid hyperinflation, keep the population happy and remain in power, Argentina's ruling party will have to start generating confidence, so that it can reduce capital flight and begin drawing domestic and foreign investments. Unless its "suicidal gene" takes over -- something that, admittedly, happens often in Argentina -- it will have little choice but to follow that road.



"Despite Victory, Argentine Leader Faces Hard Choices "